The mean-spirited, and legally insupportable approach to chapter 13 cases that led to denial of confirmation and dismissal of the debtor’s case in In re Mycek, has been reversed and remanded by the district court for the Central District of California. No. 12-369 (C.D. Cal. Oct. 22, 2013). [Read more…] about Judge Johnson’s Dismissal of Chapter 13 Reversed by District Court
Creditor Lacks Standing to Move for Dismissal under 707(b)
In In re Gandy, No. 11-30369 (Bankr. E.D. Tenn. July 12, 2013), the court found that a creditor had no standing under section 707(b) to seek dismissal of a chapter 7 petition, after conversion from chapter 13, where debtor’s petition documents showed him to be below-median. [Read more…] about Creditor Lacks Standing to Move for Dismissal under 707(b)
A Cautionary Tale on Good Faith
The Northern District of California upheld a finding of bad faith for debtor’s chapter 13 fee-only plan. In re Ingram, No. 11-408 (N.D. Cal. Sept. 28, 2012). The plan proposed to maintain payments on first mortgage, strip off the second wholly unsecured mortgage, and pay only attorney and administrative fees. The debtor later filed an amended plan proposing to make lower payments for a longer duration while still paying nothing to unsecured creditors. The Bankruptcy Court raised the issue of good faith sua sponte.
The district court found that the bankruptcy court applied the appropriate “totality of the circumstances” standard as set forth in Leavitt v. Soto (In re Leavitt), 171 F.3d 1219 (9th Cir. 1999) and Goeb v. Heid (In re Goeb), 675 F.2d 1386 (9th Cir. 1982). It noted, however, that a “veiled chapter 7” plan is rarely proposed in good faith. Though the court teetered on the edge of a per se rule against such plans, it did not step over that edge.
The debtor’s downfall here appears to have been the fact that when he amended his plan to lower payments but extend the duration, he refused to explain to the bankruptcy court why he could not maintain the higher payments and pay something to unsecured creditors. The court found that the original proposed plan indicated that the debtor could afford to pay more into the plan without regard to duration and the debtor failed to counter that inference.
Lesson: where fee-only plans are generally disfavored, it is perhaps wise not to antagonize the court when trying to confirm one.
Fifth Circuit Approves “Fee-Only” Chapter 13 Plan
In good news for bankruptcy debtors who cannot afford to file chapter 7 or for whom chapter 7 is otherwise impracticable, the Fifth Circuit affirmed the bankruptcy court’s confirmation of the debtor’s “fee-only” chapter 13 plan finding that such plan are not per se bad faith. Sikes v. Crager (In re Crager), No. 11-30982 (5th Cir. August 16, 2012), rev’g, W.D. La. 10-1863 (Sept. 30, 2011). [Read more…] about Fifth Circuit Approves “Fee-Only” Chapter 13 Plan
Section 1325(b) Requirements Not Applicable to Plan Modification
The Ninth Circuit BAP found that the requirement of section 1325(b) that all of the debtor’s projected disposable be paid into the plan during the applicable commitment period, is not incorporated into section 1329 for plan modification. In re Mattson, No. 11-1478 (B.A.P. 9th Cir. April 5, 2012). [Read more…] about Section 1325(b) Requirements Not Applicable to Plan Modification